budgeting expenses vs paid question.

[dan0038]

Hey guys, I have a question from my sac that is doing my head in since i am kinda convinced that my answer is correct. The question is:

Rent paid per month is $1000. This amount increases by 10% as of January 1 2014 . The amount for rent is paid on the last day of the previous month. Calculate the rent expense for the year ended June 30 2014.

My teacher is convinced that I am overthinking it but I feel confident that I am correct with reasoning. I wanna hear from year 12 accountants that have reasonings to back up my answer or reasons that may undermine my answer.

[omcgil15]

Hey guys, I have a question from my sac that is doing my head in since i am kinda convinced that my answer is correct. The question is:

Rent paid per month is $1000. This amount increases by 10% as of January 1 2014 . The amount for rent is paid on the last day of the previous month. Calculate the rent expense for the year ended June 30 2014.

My teacher is convinced that I am overthinking it but I feel confident that I am correct with reasoning. I wanna hear from year 12 accountants that have reasonings to back up my answer or reasons that may undermine my answer.

Hey,

With regard to this question, I would believe the amount of rent expense is $12,500

On December 31, you pay $1000 for the month of January, this amount is prepaid and adjusted for as at 31 Jan which would be an expense of $1000. Every month after this would be $1100. Thus, (7 x 1000) + (5 x 1100)